Legal fears hold back RFID adoption

The market for RFID is inhibited by pending legislation in the US

Uncertainty over pending legislation means that just 10 medications will be tagged using RFID technology on a large scale in the US during 2006, analysts predicted today.

An ABI Research study of RFID tracking in the pharmaceutical industry found that the slow roll-out contrasts sharply with the optimism of a year ago, when the evidence suggested a nearly 350 per cent increase in pharmaceutical RFID use between 2005 and 2006.

Sara Shah, ABI Research's industry analyst for RFID and M2M research, believes that the slowdown is attributed to cost and a retreat from the " irrational exuberance" of early market hype. Companies are also executing small-scale pilots before committing to full deployments.

One important inhibitor of this market concerns pending legislation in the US. The Prescription Drug Marketing Act (PDMA) of 1988 requires biotech and pharmaceutical manufacturers to prove they have processes in place to prevent the diversion of drugs.

This encompasses the idea of 'pedigree', or the ability to trace a shipment's 'chain of custody' at all stages from manufacturing to delivery.

The legislation caused "an uproar", said Shah, because there was no way that companies could achieve this within the specified time. So the law was subjected to a temporary stay and has not been enforced to date.

Certain states then decided that they would enact their own laws, due to increased drug counterfeiting.

The first was Florida where legislation is scheduled to commence in July 2006. California will follow suit in January 2007.

Coincidentally, this is also when the moratorium on enforcement of the PDMA expires, and is the target set by FDA guidelines for widespread use of drug shipment tracking, Shah noted.

"Initially, only high-value, frequently counterfeited or stolen drugs such as Pfizer's Viagra and Perdue Pharma's OxyContin are likely to be tagged," she said.